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McClatchy Newspapers, Published July 24 2012

Survey: Nearly 10% of employers to drop health benefits

LOS ANGELES – Nearly 10 percent of employers anticipate dropping health coverage for their workers in the next three years as medical costs keep rising, according to a new survey by consulting firm Deloitte.

The vast majority of companies, 81 percent, said they plan to continue providing health benefits even as new rules begin in 2014 under the Affordable Care Act. An additional 10 percent of employers said they weren’t sure, the survey said.

More than 160 million Americans get their health care through employer-sponsored plans. The average cost for health care benefits increased 9 percent last year, while average wages grew 2.1 percent, according to the Kaiser Family Foundation & Health Research Educational Trust.

In response to those trends, more employers are exploring new ways to provide health benefits. Some are looking into defined-contribution plans where they give workers a fixed amount of money, akin to a 401(k) plan, and allow them to buy their own insurance on the open market or in a private exchange.

Other companies are interested in direct contracting with hospitals and large physician groups in hopes of striking a better deal.

When asked about what’s driving up medical costs, the employers surveyed put hospitals at the top of the list, followed by inefficiencies and unhealthy lifestyles.

Nearly two-thirds of employers, or 64 percent, gave the U.S. health care system a C or lower on performance.

The Deloitte survey included 560 randomly selected employers with 50 or more workers that were offering health benefits.